Sovereign wealth funds: Gearing up

The hope is that large strategic investors such as sovereign wealth funds will become an integral part of Latin America’s financial landscape. The reality, however, is more complex

By Ben Miller

Latin America’s appeal to other regions eager
to access its resource wealth is hardly a secret. But so far,
large state-backed investments into the region’s
strategic sectors have been limited and have often passed under
the radar.

Today, there are signs sovereign wealth funds and other
large strategic investors are looking to step up their presence
in Latin America – not least through deals in the
region’s often challenging public equity
markets.

Mubadala Development Company’s $2 billion
purchase of 5.63% of Brazil’s EBX this March
underscored a growing interest in the region from Gulf states
eager to diversify and secure access to resources. The Abu
Dhabi government investment vehicle made an investment
characteristic of large funds – an infrastructure bet
supporting a large, diversified well-known player at the
pre-IPO stage.

EBX, the holding company for Eike Batista’s
family of companies, also used its...